Monthly Archives: February 2005

SAP in Government Technology

Saturday, April 30, 2005

SAP in Government Technology

Magnifying Data
By Jim McKay
Apr 27, 2005
Whether it’s referred to as text mining, performance measurement, predictive analytics, enterprise analytics or business intelligence, software applications that help manage and analyze data are finding their way into public-sector agencies — sometimes with inspiring results.

Oftentimes government agencies possess the data to reach constructive conclusions, but have no way of putting the data into a usable format. That’s where analytics come into play. Analytics are especially useful in areas where huge amounts of data are amassed but often not used constructively, such as billing fraud, audit selection, law enforcement and as an addition to ERP systems.

Analytics can be used to determine where crimes are likely to occur within a given time frame, as the police in Richmond, Va., demonstrated when they overhauled officer deployment on New Year’s Eve.

Practical Purposes
The software differs by name from vendor to vendor, but the basic premise is the same: Convert data to streamline processes, save money and increase productivity.

SAP’s platform, sometimes called a business intelligence portal, offers a data management system that organizes and analyzes data from varied systems and organizations, then presents it to users through a common portal.

“We provide full-blown enterprise software,” said Steve Peck, president of SAP Public Services. “It’s integrating business processes for companies of all shapes and sizes, and entities of all shapes and sizes, helping them integrate the business processes and become more efficient.”

SPSS Inc.’s analytics software uses algorithms to develop “clusters,” or packets, of useful information derived from statistical analysis or text mining, presenting those clusters to the user through a graphical interface.

Dallas’ 311 system, though extremely useful to city residents, creates a problem for the city because of the vast amounts of data pouring through the system. To get a better handle on what the data could tell the city, CIO Brian Anderson enlisted Cognos software to develop performance measurement strategies for more effective management.

Anderson said he saw the benefits of data analysis while he was CIO of Philadelphia, where the police department spent $11 million per year on overtime. Analysis of the data revealed that a district attorney policy cost the police way too much money and manpower.

The policy called for numerous officers to be listed as arresting officers in each arrest, and all arresting officers were required to be in court with the arrestee. For every officer in court another had to be paid overtime to fill his regular shift.

“Sometimes we had 15 [officers] for every arrest sitting around the courthouse,” Anderson said. “In identifying the issue, we were able to change the management practice and saved millions.”

The spreadsheet numbers didn’t show the trends, he said, but the analytic software did.

One key area for state and local government users of SPSS analytics tools is Medicaid fraud, according to SPSS’ Public Sector Technical Director Bill Haffey. New York state contracted with SPSS to develop a data-mining or predictive analytic model that would detect fraudulent Medicaid claims.

The model included five years’ worth — more than 10 terabytes — of data from more than 52 counties. The system uses algorithms to group providers with similar behavior. Provider groups are defined by volume of Medicaid claims, type of procedure, or demographics of their patient group. Once the software develops provider groups, Haffey said, sparsely populated groups of providers arouse suspicion because those providers are billing in unusual patterns.

Commercial Origins
The concept originated in the commercial sector. Haffey used an analogy of a grocery store manager watching shopping carts to see who buys what.

“With that kind of information,” he said, “you can make marketing decisions, such as putting bananas in the same isle as cereal or maybe on the other side of the store so the shopper has to walk from one side of the store to another and picks up things along the way.”

A more progressive example is a T. Rowe Price call center. Since it’s known that people who buy mutual funds also tend to buy insurance policies, callers purchasing mutual funds are immediately tagged as potential insurance buyers, said Haffey, adding that putting analytic software in a commercial perspective makes it easy to see how the software could be useful in government applications as well.

The concept is put to the test in auditing. States have typically used the “volume exercise” to choose which corporations to audit by looking back at corporations audited in the past and where the payout was large. Those corporations would be targets for audit again.

Analytic software can predict, down to each corporation, what the tax adjustment would be if the corporation were audited. With those numbers, gathered from sources such as the previous year’s returns, government can be more precise in targeting corporations that will yield large adjustments.

Analytics and Law Breakers
Police in Richmond, Va., plan to expand the use of analytics to boost efficiency after successfully using the software tool to plan for the New Year’s Eve celebration, which has put an annual strain on the department. Traditionally New Year’s Eve and New Year’s Day in Richmond meant a full shift for every police officer in the department.

“They pretty much considered the holiday a two-day period and just flooded the streets with officers,” said Kelly McCue, formerly a crime analysis supervisor with the Richmond Police Department and now a research scientist with RTI International, who still consults with Richmond. “We fell back a little bit and said, ‘Maybe that’s not the best way to do things.'”

Last year, Richmond police tried analytics software furnished by SPSS to determine whether the tool could help with the staffing problems caused by the holiday.

“We looked at historical trends and patterns, and Richmond, like many communities, is challenged by random gunfire on New Year’s Eve,” McCue said. “We decided to go ahead and use a risk-based deployment strategy.”

By looking at trends developed from the software, department officials confirmed what they thought they knew: Flooding the area was a waste of resources. Using the software, officials found that the four-hour period between 10 p.m. and 2 a.m. was the critical period and decided to deploy officers in strategic locations at strategic times.

Fifty officers were allowed to have the holiday off, saving the department $15,000. They also reduced citizen complaints by 47 percent and increased the number of firearms removed from circulation by 245 percent.

The results convinced the department that analytics is a key part of its future.

“One thing we realized is that the whole field of behavioral profiling of criminal investigative analysis is based on the concept that crime — even the most serious, violent crime — tends to be very homogenous and predictable,” McCue said. “If that wasn’t the case, we wouldn’t have profilers, and we wouldn’t have all those cool movies. We’d really be at a loss.”

The department now uses analytics early in investigations to get a jump on trying to determine motive, and is beginning to think in terms of models that can predict criminal activity, McCue said.

“Using this type of methodology, we’ve now been able to characterize certain types of crime, particularly violent crime, using information available at the scene, victim characteristics, things that might have made them a higher risk or lower risk,” she said. “That starts to provide insight in terms of the type of person likely to have committed the crime or perhaps motive.”

The software clusters information so the investigator can detect behavior patterns and narrow the search, though investigators must rely on their own skills to interpret results, McCue said.

“You’re not able to run these algorithms and have it come back and say ‘Bob did it.”‘

The New Tools
Today’s analytical tools are getting easier to use, but users must know what data to look for to utilize the tools effectively.

“It’s a balancing act,” McCue said. “It’s important to understand some of the math involved, but the new tools — especially those that are Windows based — are highly intuitive.”

She said the challenge is acquiring the domain expertise required to develop models that are accurate, valid and useful to the end-user. There are different types of models, and the models can be as complicated or as simple as the user wants.

“If you end up with something so complicated where it’s like the [crime occurs on the] second Thursday of each month, then it becomes really difficult to act on it. In some cases, we will compromise on accuracy to have only the variables that are relevant.”

Those variables are usually time, location and victim characteristics. In some instances, said McCue, users must be careful not to oversimplify the model. She gave an example of a model designed to predict if armed robberies were likely to escalate into aggravated assault.

The system might come up with a statistic that just 3 percent of armed robberies escalated and could conclude that it was statistically not a factor, which would be dangerous.

“Theoretically you could create a model that’s very simple that would say it would never happen,” McCue said. She said the hard part is determining what data is available and which model to use.

Going the Wrong Way
Broward County Public Schools in Florida stumbled with its first application of analytics, but is at it again. The district — the sixth largest in the country with nearly 40,000 employees — began implementing business analytics about three years ago and has since spent around $25 million.

The district first implemented two SAP business modules where the cost of the software was $3.5 million. The problem arose with implementation of the models, which ended up adding $17 million to the implementation’s overall cost. Vijay Sonty, who took over as CIO of the district last year, said the district would have benefited from more planning, but the district is now building some useful analysis models and has learned a few lessons.

“We went the wrong way,” he said. “We did a lot of things wrong. We didn’t do a needs assessment. We didn’t get our users involved. The lessons [we] learned are simply the first things you do before you do a large-scale ERP rollout.”

A main sticking point with the district was that it maintained business practices and largely paper-based processes that were 15 to 30 years old, and wanted the software to adapt to those. Specifically, the district had problems matching SAP’s payroll system module to processes already in place, and kept spending money trying to make it fit, Sonty said.

“What happened is the customer is always right,” he recalled. “[SAP] said, ‘Go this way. Adopt SAP methodology.’ We said no.”

The district spent a lot of money on convoluted systems, and is trying again with SAP — this time armed with more knowledge.

“With this new implementation, we’re doing a detailed needs assessment defining what the current processes are and looking at what processes we can improve.”

An important part of implementing analytics is getting buy-in from everyone involved, said SAP’s Peck.

“If someone is trying to implement a project and it’s just ‘that IT project,’ that’s a recipe for disaster,” he cautioned. “In this case, everybody is really on board.”

The early benefit is that the district has learned it must streamline and change its practices.

“We’re taking a detailed look at the human capital, the financial capital — do we have the right knowledge and the right management structure to make sure we have the right project leads,” Sonty said. “And we’re taking a phased approach.”

The district is implementing several of SAP’s business intelligence modules in phases, including a CRM module, a financial system, an HR system and eventually, a complete ERP portal. This time, the total software cost should be around $6.3 million.

The goals are to determine “business benefits” to each department and manage the data from various departments more efficiently for reporting purposes and performance measurements, Sonty said.

“Previously we didn’t have a good inventory system set up. We didn’t have a good work order system, and there was a lot of duplication of data and a lot of data entry error. Now we’re able to minimize all that because you enter the data once at the source, apply uniform business rules and practices across the district, and combine it into an enterprisewide environment,” he said. “The real value for us goes back to the business warehouse. All these modules being integrated, they’re able to use SAP’s portal environment to slice and dice the data, and run reports.”

In addition to the benefits of report writing capabilities, what the software means to the district, in simple terms, is that a user can find pertinent information quickly without having to manipulate multiple systems.

“Previously we had 35 systems to navigate,” he said, “and the reports were always wrong.”

Jim McKay
Justice Editor

CHI-Squared Meeting Information

CHI-Squared Meeting Information

SAP Basis, ABAP Programming and Other IMG Stuff

SAP Basis, ABAP Programming and Other IMG Stuff.

Despite the prosaic title, good stuff for SAP technical developers, including some obscure but important programming tips and tools.

Tableau Software – Drag and Drop Analytic Functionality Against Complex Databases

IT Management: Executive Tech: “Bringing powerful minds to bear
Tableau is the brainchild of a handful of Stanford grads who complained during their student years about how hard databases were to use � and then devoted their post-graduate years to doing something about it.
Christian Chabot, CEO of Tableau Software, formerly headed BeeLine Systems, a mapping company that was acquired by Vicinity Corporation (now Microsoft MapPoint). Pat Hanrahan, CTO, was one of the first employees of Pixar and has received two Academy Awards for the visual technologies he developed there for motion pictures. ”

MBA Applicants Are MIA

MBA Applicants Are MIA: “APRIL 18, 2005

APRIL 18, 2005

NEWS: ANALYSIS & COMMENTARY

MBA Applicants Are MIA
As tuitions soar and the job market strengthens, some B-schools are downsizing — and all are getting less selective

When the deans of seven of the top U.S. business schools got together for their biannual meeting on a chilly, gray day earlier this year, the usual topics of conversation — MBA recruiting, new courses, and leadership training — quickly gave way to a gloomier subject. According to people privy to the secretive meetings, the men, gathered at an Ivy League campus, solemnly broached a sensitive topic: Applications for the class entering in the fall would be down — just as they were last fall. Rumors were whispered that some schools in the top tier might not fill their classes. One dean was even called out for deciding not to report applicant and selectivity numbers.

Indeed, applications to BusinessWeek’s Top 30 MBA programs have dropped almost 30% overall since 1998, with some schools seeing declines of 50% or more. And with the job market improving, more prospective applicants may find themselves with opportunities that will, if history is any indicator, pull them away from B-school.

What’s more, to cope with sliding interest, some schools have gone so far as to quietly reduce the number of students they enroll each year, BusinessWeek has learned. Carnegie Mellon University’s Tepper School of Business has cut its class size from 240 students to a target of 160. Vanderbilt University’s Owen School of Management dropped from 220 to 180 students per class. Other schools have done the same. “We’re seeing more of our peer schools competing with us for the same students,” says James W. Bradford, dean at Vanderbilt. “Schools are setting new expectations based on what the market is.” Even as they’re downsizing their expectations, some schools that were historically highly selective, admitting fewer than 20% to 25% of applicants, gave a thumbs-up to 35% or more applicants for the class entering last fall. Vanderbilt, for one, admitted some 68% of its applicants in 2004 — up 30 points in just four years.

WILL SOME GO UNDER?
These troubles come at a time when MBA programs find themselves facing one hurdle after another. Blame for not being a stronger bulwark against corporate scandal and poor business ethics is still being hurled at the schools. Tuition is skyrocketing — as high as $39,100 a year at Harvard Business School, where applications were down 16% in 2004 over 2003. And post-MBA salaries have stagnated, stuck at an average of around $84,000, giving many wannabe MBAs pause. Plus, competition from European schools for bright Americans has U.S. schools on edge. Foreign students, once a dependable presence, have trouble obtaining visas to attend U.S. B-schools post-September 11. Add to that a shift in hiring, with employers recruiting more undergrads and industry types, and B-schools find themselves beset by worries. No wonder one dean at the B-school powwow questioned aloud whether all of the Top 30 MBA programs would make it through this protracted slump, sources say. Admitted another dean, according to reports: “This is a serious problem.”

Perhaps the toughest issue is soaring tuition. At top-tier schools, tuition is up nearly 55% over the past six years, to an average of $33,774 for each of the two school years. And students bear far more than the cost of the degree. With an average of five years’ work experience, the typical 27-year-old student gives up an average pre-MBA salary of about $67,000. MBAs also fork over cash for everyday expenses such as housing, food, and utilities — costs that are also on the rise. Schools such as Columbia Business School in New York City and Stanford Graduate School of Business in Palo Alto, Calif., recommend that single students budget more than $64,000 a year.

Increasingly, that’s looking prohibitive. Students “are bumping into their loan maximums,” says Edward A. Snyder, dean of University of Chicago’s Graduate School of Business, which has raised its tuition 6% to 8% each year for the past five years and has seen applications go down for two straight years. “If the [loan] does not cover all of the costs, some people literally cannot put a package together to come.” At most schools — Chicago included — scholarships and other financial help haven’t kept pace with tuition hikes.

Having piled up all that debt, MBAs want to count on a healthy premium in their post-degree salaries. But these days there’s no guarantee. Salaries have barely budged in the past six years. After shooting up from $77,800 in 1998 to about $84,250 in 2000, they have been fairly flat, with average base pay for 2004 grads ringing in at $84,030. “It’s one thing if you’re getting a big signing bonus and salary [in banking], but there are people who imagine B-school is a good thing to do, then they do the math, and it doesn’t compute,” says Robert J. Dolan, dean of University of Michigan’s Ross School of Business. “We have to be very concerned.” In BusinessWeek’s survey, MBAs in the Class of 2004 at University of Pennsylvania’s Wharton School said they had amassed nearly as much in loans as they were getting in base salary — more than $73,000 in average debt vs. around $95,000 in salary. Reported a 2004 grad of New York University’s Stern School of Business: “Those considering an MBA should be sure the job waiting at the other end is worth the sacrifice.”

Meanwhile, European schools have managed to capture some of the fall-off. Many report growing interest among U.S. applicants over the past several years. Beyond offering a diverse student body and better exposure to global business practices, European MBA programs are shorter — about 14 to 16 months — and tuition rates, despite the weak dollar, promise significant savings. The total cost for the whole experience tops out at around $58,000 — less than the cost of one year at many U.S. schools.

Another more subtle but no less potent trend is undermining the MBA: employers’ hiring and promotion practices. No longer is it de rigueur for young corporate up-and-comers to apply to B-school after four years on the job. Now managers are promoting some superstars without the degree. “A lot of recruiters ask me if their best people need to go back to business school,” says R. Glenn Hubbard, dean of Columbia Business School. “I argue that they should…but there will always be people who will be successful without it.”

PROMOTING FROM WITHIN
Goldman Sachs & Co. (GS ) finds those people increasingly to be the norm rather than the exception. The investment bank is one of several companies to launch internal studies on whether MBA hires do better than undergrads who get internal training and promotions without the MBA. The kind of training Goldman and others provide is part of the growing array of management education alternatives chipping away at the traditional MBA, from hybrid, on-and-off campus degrees to online and other executive courses.

Over the past five years or so, many nameplate companies that had previously heavily recruited MBAs have altered their hiring mix. Large consulting firms such as McKinsey & Co. are ratcheting down the percentage of new MBA hires and adding more undergrads and industry professionals. Goldman went from hiring about 25% undergrads and 75% MBAs for each year’s group of hires to exactly the opposite since 2000. “Now we try to figure out how many analysts we can promote, and we fill in with MBAs,” says Aaron Marcus, head of campus recruiting. Concedes Chicago’s Snyder: “This [shift] is fundamental, not cyclical — hiring non-MBAs is something companies have become more comfortable with.”

The full-time MBA isn’t going to disappear anytime soon, of course. But the need for change is increasingly clear, and reform efforts need to go beyond the cosmetic. Schools might consider adding more depth to their offerings, even at the expense of some breadth. Alumni fund-raising for scholarships could be stepped up to help meet rising costs. Schools also need to find ways to break through recruiters’ growing feeling that even top-tier MBAs are becoming a commodity. Figuring out how to combat the forces at work against them may be B-schools’ most pressing assignment.

By Jennifer Merritt

Scientific Minds

Scientific Minds

The CAN-SPAM Act: Requirements for Commercial Emailers

The CAN-SPAM Act: Requirements for Commercial Emailers

Not so wonderful spam: the 2004 law details.